Curcio Paper

Planning for Prosperity in Oregon

Initiatives for Change

Prepared For the Oregon Economic and

Community Development Department

Paul Curcio

May 1, 2003

Planning for Prosperity in Oregon

Initiatives for Change

Preface.. 4

Part I – State Planning.. 9

A Systems View of Land Development and Economic Development 9

Oregon’s State Planning Program.. 10

A Critical Analysis. 11

Overview.. 11

Land Values Then and Now.. 12

Constrained Land Supply and Other Myths. 13

Optimizing Outcomes and Balanced Goals. 17

Jurisdictional Interdependencies. 18

Enabling Development 18

Complicating Factors. 19

Summary. 21

Part II – Suggested Improvement Initiatives. 23

Purpose and Goals. 23

Strategy. 24

Top Three Initiatives. 25

The Competitive Land Supply Initiative. 26

1.     Expand boundaries based on quality, not rate, of growth. 26

2.     Establish enabling legislation for community service fee assessment and bonding. 27

3.     Institute industrial development as an allowable use outside the UGB. 28

4.     Create statewide enabling legislation /rules for planned district ordinance (PDO) at local level. 28

5.     Invest in standard zoning templates to allow clear and objective standards. 29

6.     Eliminate the priority lands statute. 30

7.     Align tax incentives with managed conversion for holding EFU land. 30

8.     Align tax policy and allowable uses with competitive farming policy. 31

9.     Develop enabling legislation for revenue sharing and regional governance. 32

10.   Target policy to enable re- development. 32

11.    Reconsider the approach to development and conservation of EFU land. 33

12.    Update annexation and incorporation laws to balance no growth forces. 34

The Development Predictability Initiative. 34

1.     Rework appeal process to limit vulnerability of local choices. 35

2.     Establish LUBA as a court of resolution of last resort. 35

3.     Remove wetlands without mitigation plans from usable inventories. 36

4.     Establish training institute for public and private development professionals. 36

5.     Reconsider resources for state and local boards and commissions. 37

6.     Provide priority funding for functional plans on ports, rail, roads and universities. 38

The Planning, Efficiency and Accountability Initiative. 39

1.     Focus state involvement in local plan-updates and shift method to results and incentives. 39

2.     Provide performance based compliance method for all goals. 39

3.     Eliminate Periodic Review and Refocus on PAPAs, standardized elements and fee services. 41

4.     Establish the Oregon Development Planning Authority (ODPA). 42

5.     Separate goal, rule making and oversight functions from technical assistance. 43

6.     Focus streamlining on specific products and channel energies back into processes that need to be redesigned. 43

7.     Establish Council of Governments (COGs) as regional service providers. 44

Part III – Case Studies. 45

Newberg Dundee Bypass. 45

Barnhart Road Extension. 48

METRO UGB expansion and Damascus addition. 50 



As a past director of Oregon’s Department of Land Conservation and Development, I am pleased to have been asked by the Oregon Economic and Community Development Department (OECDD) to offer some thoughts on how best to align public policy for land development and economic recovery.  While some may choose to discount my observations because of my brief experience in Oregon, I would offer that my perspective comes with over two decades of working in the community planning and development arena.  I am a licensed architect and an award winning urban designer with a long and strong history of accomplishments in innovative planning at the local and regional level.  Additionally, I have served with noted success as a management consultant to many large agencies in significant turn around endeavors.  It is with this depth of training and commitment to the work of building strong economies and sustainable communities that I offer these thoughts on the challenges facing Oregon.

My hope is that this paper begins to describe an agenda of actions that would build on Oregon’s success in resource protection with a positive vision and proactive stance for planned growth. The state’s leadership faces tough choices on how best to protect Oregon’s environmental legacy while allowing Oregon to successfully compete for the share of the global economy it requires for a prosperous future.

A credible consensus on select choices from the agenda of actions will require the best of public dialogue. Oregon’s Land Use Planning Program has long been noted for successes in consensus building, but current circumstances demand a more extensive range of options to be explored than the course of events seem to be producing. The state’s choices could yield an adventure of discovery that would require an extraordinary level of trust and courage to yield the best of outcomes. I invite readers to challenge and correct the many assertions that have been made as they collectively search for the truth.  Clearly this dialogue is demanding of greater research; interestingly enough current policies are based on assertions that are themselves in need of the same type of factual substantiation.

The challenge I have chosen to take on is to help reframe some historic points of conflict that have been detrimental to innovation and appear to militate against the true power of public dialogue to define new paths. My goal is to help obtain, or perhaps regain, a common ideology, one that is less a point of friction, but rather a lexicon of shared interests and community gains integrating the benefits of growth with the responsibilities of conservation. Such new ideology is desperately needed as a beacon to illuminate the way for the next 30 years of growth supported by supportedsu the best state-planning framework in the nation.

The energy that launched the program, fueled primarily by Oregonians passionate about saving diminishing farm and forestland, was essential to establishing regulations.  The sustained vitality of a statewide land use program has, however, come with a predictable liability.  A network of organizations and staff that is committed deeply and passionately to an ideology of resource protection has become myopic.  In focusing on defending the system, they have compromised their ability to envision the benefits of enabling growth.  Program loyalists challenge assertions of new paradigms that are absent factual backing but can offer few facts for the existing paradigm.  As will be noted in the paper many core growth management strategies, from constrained land supply to transit oriented development, have survived based on purported benefits that have not materialized.

It is an appropriate time, 30 years after Senate Bill 100, to honor the history of the program by re-engaging the state’s citizens and leadership, as was done at the onset of the program.  Now, however, this, re-examination should concentrate on finding the appropriate balance of conservation and development efforts to reflect the state’s interest for today’s economy and society. The following material is provided to support those individuals, departments, and organizations that may be charged with reinvigorating and reorienting the state land use system to assure that Oregon is on track for achieving all 19 State Planning Program Goals, with a special focus on Goal 9: Economic Development.  A preliminary inventory of interventions, which could be initiated by the state to capitalize on opportunities and overcome challenges in pursuit of land and economic development goals, has been provided as a point of departure for public dialogue.

Much has been accomplished in Oregon since the state embarked on comprehensive planning three decades ago, but changes in the global and state socio-economic environment requires us to reassess methods for achieving the 19 State Planning Program Goals.  As a means of providing a historic and current context to contemplate the program’s future, this paper is structured in three sections: State Planning, Suggested Improvement Initiatives, and Case Studies in Complexity, Cost and Confusion. While formulated to comprehensively frame an agenda of actions against a background of issues, this combined work only begins to compile some of the background research and analysis needed for informed public dialogue on aligning land and economic development.  The underlying context of this framework is to bolster the statewide planning system in a way that enables Oregon’s communities to maximize their potential to develop.

Executive Summary

Land development and economic development are inextricably woven together by the basic rights provided for property ownership and powers granted to states to regulate the use of land in the pursuit of community benefits.  Striking the right balance of these rights and powers is a challenge that has been grappled with by all communities.  Oregon has led the way in establishing a system of comprehensive planning that secures the state’s interest as represented through state adopted goals.  Ideally, achievement of these goals in the right balance will optimize outcomes as scarce public and environmental resources are used and the right of property ownership is honored.

The State Land Use Planning Program is now approaching its 30th anniversary and many have questioned its viability while others have proclaimed its perfection.  Much has changed since the program’s inception and much remains the same.  Few doubt that the Program’s 19 goals would receive overwhelming support by the million-plus new residents that have arrived in the state since the program’s formation. Arguably, a majority would also say that the ability of the state to compete for the creation and retention of wealth is both hampered and supported by the land development system as it currently stands. It is undeniable that the resource economy, while still a vibrant portion of industrial output, is no longer the key generator of wealth creation.   The resource economy dominated policies of the past do not provide a complete road map to the prosperity to which Oregon aspires and for which it should plan.

The land development system runs beyond land use planning and touches on many other public sector activities that provide essential infrastructure and tax structures to support the highest and best use of land.  Additionally the economic development system includes community supporting civic services, capital access, income taxation, and marketing efforts.  The two systems for land use planning and economic development have a high degree of interdependence yet few mechanisms exist for the proactive integration of strategy or operations. Both the state’s and local jurisdictions’ interests in achieving community development are thus frustrated by their collective inability to deliberately integrate economic and land development.

Tackling significant improvements for aligning these two systems is made difficult by their scope and complexity and the settled nature of the institutions that were built to support them.  A systems view that captures the many interdependencies of different policy domains is needed to generate a viable master plan for improvement.  From this vantage point, a very focused tactical action plan can be constructed; such a plan is essential to build the consensus and trust needed for significant and continuous improvement.

A high degree of resistance to improvement is to be expected. If one comes to the conclusion that significant shifts in policy and operations are beneficial, than it is axiomatic that the leadership and force for these changes will out of necessity come from a broadly authorized citizen task force. It is my sense that now is the time to formulate and empower such a task force.  Their work will need to be accomplished in phases as they carefully analyze and deconstruct the land and economic development systems and determine how best to incrementally introduce new policies and implementing tools.

In summary, this paper inventories many specific tactical actions or interventions, some of which may prove to be viable action items in the short term; others may only spur dialogue and future ideas. Others have suggested most of the possible interventions over the last 30 years.  Whether authored by well-informed insiders, citizen task forces, or legislators, the program does not lack for a long list of proposed improvements.  Of even greater interest still is the amount of resistance that exists to these interventions.  The resistance appears not to be borne out of the technical complexity of the innovations but instead out of a legalistic system that by design focuses the debate not on what is pragmatic or useful in terms of plans and growth, but instead on what is allowed under case law, statutes and rules. Oregonians seem to find a disquieting level of assurance and comfort in procedural rulings that validate the legality of actions.  These findings by courts or commissions still leave us with the reality that “just” decisions and actions are predicated on the efficacy of the underlying rules which may, and in many cases apparently do, defy commons sense and laudable planning objectives.

When I queried those working at OECDD it was of no surprise that the top choices for change targeted major policy and implementation shifts. This is because the cumulative effect of the incremental tweaks at the margin of the program is a compromised system that has become less efficient; improvements have in fact made things worse. These past changes served to address current issues, but are now perceived as burdensome in the inherent complexity they have introduced into the system. A prime example is the priority lands statute that is discussed latter in the paper.  Thus, while the proven path of the program’s evolution has been gradual fine-tuning, the preference now seems to point to more substantive reframing of policies and the introduction of new implementation mechanisms. Following are the three major goals presented in the paper and what a sampling of economic development specialists would select as the highest priority action items:

1.      Radically increase the availability of well planned and well served land needed to create and support a vibrant economy:

·   Redefine all regional UGB areas to include a 50 year mandatory urban reserves,

·   Eliminate the priority lands statute,

·   Design assessments to promote highest and best use not speculative holding.

(See the Land Supply Initiative for more detail)

2.  Increase the probability of desired outcomes for land development that delivers on the state’s economic development objectives and community development visions:

·   Prioritize plans and financing for major public facilities and infrastructure,

·   Upgrade LUBA’s ability to act as the court of final determination,

·   Eliminate all wetlands from land supply inventory.

(See the Development Predictability Initiative for more detail)

3. Reorient the culture of state and local government to be more development enabling and less regulatory:

·   Eliminate periodic review

·   Consolidate key agencies into an Oregon Development Planning Authority,

·   Prepare performance-based measures for determining goal compliance.

(See the Planning, Efficiency and Accountability Initiative for more detail)

A thoughtful examination of these targets and associated tactics is needed and must be accomplished quickly in order to maximize the state’s ability to participate in the nation’s next economic expansion.  A task force should be convened and staffed with consultants to prepare enabling legislation, draft rules and determine organizational consolidation schemes.  It will be easy to quickly become dismayed by the fact that everything is connected to something else and to change anything one must change everything.  The reality is that a few strategic changes will break the gridlock and set in motion the creative public entrepreneurship that launched the last thirty years of great state land use planning.  Staffing the task force with consultants may seem like an expensive approach, however, given the linkage of the land and economic development systems to the states recovery, it probably is a wise investment in expertise that comes without the self-interest of bureaucrats seeking to perpetuate the status quo. Now is not the time to sell Oregon short; given the stakes the state can only afford the best minds and most objective views available to undertake planning for prosperity.

Part I – State Planning

A Systems View of Land Development and Economic Development 

Land use regulations have been a part of the United States since the early colonial period. Periods of boom and bust have produced a wide range of state legislative and judicial actions enabling local jurisdictions to protect property rights and support a community’s “common wealth.” Anchored by our constitution is the long established right of property ownership, a concept often times confused with absolute property development rights. Many assert, with great clarity and the force of precedent, that development rights are in fact a temporal privilege extended to property owners from the community within which they reside.

It is in service of this balanced perspective of property ownership rights and development privileges that many state and local governments have developed a wide range of implementing tools.  Some states, such as California and Florida, have come to rely heavily on the environmental review process to direct growth by forcing the comprehensive examination of alternatives by discretionary decision makers.  The environmental impact statements allow decision makers to choose between the costs and benefits accruing to the community from the approval of the proposed projects, including mitigation fees and agreements, and, conversely, from a decision to deny approval. This type of extensive analysis is required for major discretionary land use choices and trade-offs to mitigate impacts are made within a political setting.  This approach has been duly criticized for being too subjective and unpredictable.  Oregon is a leader among states in promoting administrative processes where project level review is theoretically driven by clear and objective standards and where discretionary land use decisions have already been made during the comprehensive planning phase.  Oregon’s approach when properly executed thus theoretically delivers a great combination of planned growth to benefit the common wealth and predictable permitting processes that enable development markets to function effectively.

Separate and apart from the permitting process is the growing involvement by states and local jurisdictions in taking a proactive role in attracting private sector investments needed to create opportunity and economic well being. Redevelopment is a classic inner city revitalization tool sponsored by the State of Oregon that has served this purpose well.  In many jurisdictions success has come by leveraging limited upfront dollars with tax increment based bonds to launch large and risky projects.  Local economic development agencies have also proliferated as jurisdictions realized that the highly specialized departments at the state and local level are not oriented to proactive marketing of the community. Collectively these and other types of community based economic development apparatuses have been employed to bring in land uses that have the net effect of helping to create and retain local wealth.

Thus, from a historical perspective as well as a current pragmatic view it is appropriate to evaluate land development and economic development as highly inter-related activities.  Land development may be seen from a systems perspective as consisting of land use planning (zoning and general plans), infrastructure investment (public and private provision of roads, water and sewer) and land tax policy (valuation, rates and other assessments that encourage and or penalize certain actions).  Economic development may also be seen from a systems perspective as consisting of capital access and income taxation (funds and incentives for business activities), public facility provision and operation (e.g. public education, safety & health) and marketing (business recruitment and retention including leadership development). Each of these systems and their components span public and private sectors and are highly inter-related and interdependent. Anecdotal evidence suggests that when the systems are deliberately aligned, a jurisdiction will tend to fare better in competing for wealth creation and retention.  Redevelopment areas and empowerment zones are but of a few classic examples of this type of alignment.

Oregon’s State Planning Program 

In 1969 the Oregon Legislature adopted Senate Bill 10 with the purpose of promoting comprehensive and coordinated statewide planning to provide for orderly growth and development while protecting the state’s resources.

The initial bill established 9 planning goals that were seen as a way to guide the autonomous decision making of local government that had for the past half century struggled with adopting and implementing local comprehensive plans.

Senate Bill 100 followed in 1973, as did other amendments in 1974, 1975 and 1976, to expand the goals to include greater conservation emphasis and provided the state with greater funding and enforcement to support local planning.  The objective was to encourage all local jurisdictions to complete and adopt local comprehensive plans and have them acknowledged by the State by 1976.  This goal was not fulfilled until much later in the next decade and, in part, accomplished only after issuing exemptions for smaller jurisdictions.

The fundamental purpose of the goals and the plan acknowledgement process is to assure that the collective state interests are protected by local plans and implementing programs.  The ongoing protection of the state interest is accomplished in a couple of prescribed ways. Most comprehensively, a system of periodic review requires jurisdictions to review their plans on a scheduled basis, report to the state on their conformance to the goals, and to create a schedule for updating plans and implementation documents, as necessary. Whenever a community amends local plans or codes, the appeal process, as dictated by statute, allows participating parties to appeal any local land use decision to the Land Use Board of Appeals (LUBA) and, in the case of Land Conservation and Development Commission (LCDC) decisions, to the Court of Appeals.

The legislature has also charged several of the administrative apparatuses of the state with broad implementation responsibility for the state-planning program.  Many statutes actually require participation by specific agencies in many planning activities, such as regional problem solving. While implementation is clearly not conceived as only the responsibility of the LCDC and its staff other agencies have not taken a proactive leadership role in achieving the goals.  Several agency directors have in fact confided that the goals are LCDC’s and not the states.  If seen as the state’s goals then clearly all departments could reasonably be expected to lead in implementation. Additionally, the Governor’s Office in several administrations has taken on the responsibility of spearheading interagency co-ordination with the goal of aligning land planning, state investment, and tax policy in order to deliver on all the state planning program goals.  The legislature has also endeavored to provide greater certainty of property rights and clarify the role of the state in local decision-making through numerous statues.

In its totality Oregon’s land use planning system has evolved as a combination of statutes, administrative rules from numerous agencies, case law, and local ordinances.  The land development system is set out to preserve productive agricultural and forestlands; protect sensitive and hazardous natural areas, accommodate needed residential, commercial and industrial development, and minimize the cost of providing new infrastructure and public services (for development).

Theoretically, the envisioned pattern of development of compact urban form surrounded by working landscapes has been the underlying premise around which this complex system revolves.  This concept of contiguous and concentric development emanating from urban centers was accepted almost a priori as an optimal pattern, given the value created by the working landscape and the costs avoided by unplanned and wasteful sprawl.  It is the core concept driving the Urban Growth Boundary approach to a tightly rationed land supply. It is, however, only one tool for directing growth; it certainly is not the only tool for planning for growth, nor may it be the best tool for achieving other goals.

The system as a whole has been viewed as delivering a powerful series of linked benefits: local control, protection of state interests in terms of environmental conservation and economic development, private property rights established with clear and objective standards, and a fair process of open decision making with broad requirements for public participation, all dutifully protected by the courts. It is conceptually a strong framework for addressing head on the strategy and operational responsibilities of government in pursuit of land and economic development.  The apparent elegance of the system may however prove to be its greatest weakness. Its conceptual integrity has proven to be a viable defense as opponents have launched numerous and unsuccessful measures to unwind the program. Arguably it may also have thwarted positive critical analysis known to be essential to the adaptive evolution of systems.

A Critical Analysis


Many things have changed over the program’s life both in terms of its substance and administration and in terms of the political, social and economic context within which it functions.  It now faces a period where many have called for its comprehensive re-examination and re-design, contrasted to the traditional single-issue review.  The state’s land use planning program has encountered single-issue or highly focused challenges before but has substantively remained the same with accommodations occurring in very focused ways and without substantively improving land use planning for either conservation or development.

The current economic downturn places DLCD’s funding and that of several other key players in jeopardy to the point where many doubt the state’s or local government’s ability to maintain the system.  Interestingly, even the most ardent supporters will concede that the program, if inadequately funded, will produce significant impediments to accommodating planned growth.  Some are willing to accept this because they see no or limited growth as a better alternative to un-managed growth. Others insist that funding must become a priority and the state shouldn’t compromise on the regulatory controls because of shortsighted funding choices. I would suggest that funding at current levels might prove adequate if focused on simplified implementation mechanisms. To guide in that simplification, a thorough and critical analysis of the system is needed to escape the powerful forces at play in maintaining existing programs and policies.

In point of fact recent dialogue on declining funds for DLCD resulted in retrenchment rather then a recreation of how the department does business.   In searching for ways to balance demands and resources LCDC steered away from substantive innovation and instead used proportional cuts with a bias toward sustaining staff functions; the shared pain form of consensus building won out over the more demanding change laden form of leadership.  It may be that the diverse and carefully balanced composition of LCDC, which is excellent from a program maintenance perspective, does not easily lend itself to a change oriented agenda.  The structure of the commission and their appointing authority for the director is worthy of further examination in that regard.  Additionally, a very strong fact based analysis of the program, its goals, its benefits and the efficacy of current implementation tools is desperately needed to support any substantive type of change. The following is an initial and admittedly cursory analysis in that regard.

Land Values Then and Now

When the program was conceptualized thirty years ago Oregon’s top two industries, in terms of contribution to the state’s gross product and total jobs, were agriculture and forestry.  They are now number 8 and number 11 in terms of gross state product as reported by the state. These land uses currently represent 93% of all privately held land in the state while producing 12.9% of the total industrial output and 8.3% of the jobs. Conversely, the vast majority of revenue and employment is currently generated on urban land representing only 2.7% of the state’s privately held land.  Considering just the income generated by these urban-based industrial clusters provides an even starker picture of the high tax revenue generating aspects of the urban economy contrasted to the tax subsidized agricultural clusters.

These facts are important and deserve careful review in several respects. Program proponents are anxious to point out the benefits of land use regulation in terms of protecting resource land for farm and forestry. Secondary research indicates that farmland has not remained relatively more affordable; to the contrary, farmland in Oregon has reportedly increased in value by 1291% in the period from 1950 to 1995 according to papers published by the Oregon APA. This is significantly more than Washington and California, states that do not provide the same regulatory-based protection. Most importantly is the role that the state’s farm value assessment program plays.  This device is used, in essence, to hold down the cost of owning farmland with the expectation that this will improve the cost structure of farming. This tax structure can, and does, result in unintended and unproductive consequences. The lower tax rate allows speculators to hold land that is planned for urbanization thus militating against the very growth management concept that is established to protect farmland. The lower tax rate may also increase the price that farmland will sell at for farm purposes because of the lower holding costs.

To rationally accept the farm value assessment program based on its economic benefit the total tax relief provided needs to be viewed and assessed in terms of the revenue that it generates in corporate and personal income tax. A set of land controls that preferences an industrial or commercial use based on the economic benefit gained by the state may also be assessed in terms of jobs created and taxes secured versus the foregone opportunity of other uses. If the intangibles of the working landscape add value to surrounding activities and benefit citizens, than those too may be quantified.

A cursory analysis suggests that a system of land-use controls and tax incentives to support competitive farming, one that does more than simply protect farmland but rather supports all sectors of the state economy, would look and work very differently than the system Oregon has today.  The net result of the current system may be critically portrayed as: 1) foreclosing expansion of growth industries vital to the state economy, 2) protecting and subsidizing hobby farms and the speculative holding of land planned and serviced to be urbanized, and 3) unwittingly supporting conflicting land uses in strategic farming areas.

Constrained Land Supply and Other Myths 

Oregonians are drawn to the distinct landscapes of working farms, open space, and truly urban areas.  From the onset of the program suburban sprawl has been an image that congers up a steady stream of program loyalists.  The antithesis of sprawl is promoted as the high-density transit oriented urban form.  Study after study of American cities show that the use of transit and other forms of multi occupant vehicle systems are in fact a defining characteristic of compact and more livable urban communities.  Oregon planning as evidenced by the UGB concept and density targets has relied heavily on this one characteristic – compact form – assuming that it is a primary determinant of transit utilization and thus a remedy to sprawl.

The harsh reality of the auto-dominated 21st century environment is that it cannot be changed by main street refurbishments or intermittent areas designated as transit-oriented development (TOD) enclaves.  While transit oriented development may be part of the solution, most promisingly for the few areas where trip origins and destinations can be consolidated along high quality transit, the extension of this concept to an overall contiguous and continuous urban form will not yield positive results. In fact, pursuit of the middle of the road, 6 –20 dwelling unit per acre densities that communities are now achieving, is a density not high enough to support transit and too dense for most extensive single occupant vehicle systems and may lead to predictable unintended consequences including increased congestion and declining air quality

It is I think likely that further research of Oregon’s urban areas would indicate that, despite attempts at increasing density to promote transit, Oregon’s emerging commuting patterns and dependence on the auto will continue to follow most American cites. That is because most trip origins and destinations are pretty broadly dispersed and traditional fixed route systems cannot provide a competitive alternative to the single occupant vehicle. Achieving the desired modal split or lower vehicle miles traveled per capita, as called for in State statute and administrative rule, is highly unlikely absent extraordinary policy shifts. Metropolitan areas in Oregon have not been able to institutionalize wide scale disincentives for the use of single occupant vehicles, nor create much more concentrated pools of origins and destinations linked by very high quality forms of transit – transit that would necessarily be subsidized for both capital improvements and operating costs.

Oregonian families contain multiple members of the workforce, as well as members with non-employment related travel needs, such as trips to educational, shopping and recreational destinations.  Household trip types are mixed in time and space and consequently militate against transit use in very complex ways.  To the degree that transit could be utilized more, communities have failed to put aside the dollars, the funding streams, or the right of ways to protect construction and or operation of fixed route systems.

It is also popular to accept that non-transportation infrastructure and civic services, such as police, fire, libraries, schools, and water and sewer, are more efficiently delivered in high-density environments.  This too is a questionable assertion. If one builds urban infrastructure on green fields adequately sized to handle these high densities this may in fact be true.  However, retrofitting existing urban areas to accept urban infill and achieve higher average densities seldom results in a lower capital cost than new green field development even at a significantly lower density. In fact, careful analysis will show that certain service costs may go down on a per capita operating cost basis with lower density.  This is likely to be the case for fire protection and public safety because of the negative impacts of density on the risks these services mitigate.

The cost of providing infrastructure for new urban development on exception land is also an under-examined scenario.  The supremacy of the priority lands statute requires that exception land, or land not reasonably useful for farming by nature of its terrain and soil classification, be developed before farmlands, under proscribed conditions.  The argument has long been made that cost savings alone is not a reason to prefer flat farmland to rocky and or steep exception land.  An argument that should be expanded upon is that an unreasonable infrastructure cost, is incurred for serving exception land when the infrastructure cost approaches the likely market value of the land when serviced.  As a case in point, some argue with considerable merit that the UGB expansion approved by Metro Council in 2003 is flawed in this regard.

As an example, infrastructure that costs $250,000 per acre for land that will only be worth that much when serviced would imply that the current landowner is willing to give it away.  Clearly a jurisdiction would need to be down to its last resort to choose this approach because of the inherent subsidy.  If communities truly wish to enable development this type of “residual land valuation” needs to be more prevalent in planning.  Residual land valuation basically tells a prospective investor if I follow the land use rules, meet the development standards, deliver a product at the price the market will support and make a profit how much can I afford to pay for the land?  This is a simple mathematical reality that is at the core of aligning land and economic development.  The reality in Oregon is that it is not clear how the infrastructure is paid for, what the probable entitlement is or what the holding period to get resolution will be.  These unknowns result in land prices that deter investment and disable development.

The allegiance to compact form and farmland supremacy concepts and ambivalence to basic land development economics seem to permeate policy formulation and operations.  For example, there is a notion that a more tightly constrained land supply will drive prices up and promote desired development patterns.  While evidence suggests that constrained supply will increase the market-clearing price for land, one has to take a leap of faith to also believe that these higher prices will promote higher density and better development.  The opposite is more likely to be found true, but, in the interest of preserving the myth of compact growth, a blind eye is turned toward unintended consequences of constrained growth.

In point of fact, builders develop what is most profitable.  If there is a market for high-density development, the additional cost of construction of that product type can be carried, and the land use will allow the density, then profit-seeking hands will build.  By holding the availability of land down and driving the land cost up communities run the risk of lowering the budget for quality construction and steering builders to lower cost products. These products are usually not the highest density product type that might otherwise be allowed.  Tightly constrained land supply also has the unintended consequence of bidding up the price on industrial land to cover shortfalls in commercial supply, putting pressure on these lands to convert to uses other than industrial, thus depleting land supply for “primary” wealth creating production jobs.

Oregon is pursuing an urban form of a bygone transit-oriented era where propinquity of uses was a necessity of the marketplace.  Unhappily, continuation of this approach will have negative long-term impacts.  The density being achieved in much of new housing and commercial development is neither at the low or high extremes; it is for the most part medium density.  There are great examples of transit oriented neighborhoods such as Orenco Station that have been built within walking distance of high quality transit linked to a high concentration of destinations in downtown Portland. The community is achieving commendable yet modest transit utilization.

Interestingly enough even these best of circumstances fail to achieve the promised benefit.  A recent study by the Cascade Institute calls into question the efficacy of public investment in supporting these types of transit-oriented communities given the modest gains in transit utilization. The density and scale of these developments simply do not approach the levels needed for the concept to make sense.  Thus it is easy to see that most development occurring in the region will be at lesser levels of density and clearly will not yield higher transit utilization.  The conclusion is simply that the compact urban form being planned and constructed is too dense to be part of contiguously expanded old urban cores served by auto dependent transportation systems, which are already at failing levels of service, and not dense enough to support truly transit oriented development.

The centers concepts being promoted in many jurisdictions, and in METRO especially will help to pool clusters of origins and destinations. However, the location of these centers within impacted service areas militate against the deployment of a center-to-center “pulse form” of rapid transit.  Pulse forms of transit have proven to be modes for inter center travel that draw people out of cars because they take riders from one center to another quickly and are preferred to routes systems that take longer.  These pulse forms of transit depend on dedicated transit ways that have proven to be problematic to obtain in existing service areas.  Nor are the centers dense or large enough to present a probability of trips being contained within each center, which could also reduce vehicle trips or their length. In point of fact, the most likely form of center-based expansion served by a low cost pulse type system of rapid transit may only be feasible through development of satellite centers.  Satellite centers or “new communities” could be separated by greenbelts from existing urban areas and linked with protected and tightly controlled transportation rights of way. Interestingly, this “New Town” or “Planned Community” form of settlement is highly unlikely given the current bias for contiguous growth of existing urban areas as seen in the administrative rule for UGB expansions, the transportation planning rule disallowing infrastructure outside of UGB’s and the effect of the incorporation and service district statutes.

The urban growth boundary (UGB) is a core concept that is deeply rooted in law and policy.  Questioning the boundary or its administrative apparatus is seen by many of the program’s proponents as an attack on the tenant of efficient urban development and natural resource protection.  Quite the contrary, an examination of the efficacy of the implementing tools should not be seen as an attack on the land use-planning program.  When the program was conceptualized many planning truths were advanced at the national and international level that have long since been scrutinized, re-stated or even debunked.  Given the passage of time and the evolution of urban development theories, the UGB requires examination in several respects.

One questionable tenant is that compact urban form is always and necessarily more efficient and or more livable. The attraction of closely knit walkable communities, where defensive space is commonplace and services are convenient and less costly, may be highly illusory.  Furthermore, this type of community may only be made available in select situations when public transit investment and pricing controls on auto use and parking are in place and at a level that achieves the planning vision. It is easy to confuse cause with effect, but constrained growth is not synonymous with managed growth. The opportunity now is to focus Oregon’s growth management efforts on plans that enable the type of development they want to see occur and not regulations that prohibit what they do not want. Additionally the state may need to face the reality that the best way to minimize congestion, air pollution and costly infrastructure and development is not through compact transit oriented development.  Achieving these laudable results is best accomplished through well-planned auto oriented development at lower density with less expensive infrastructure systems and lower land cost.

There is much confusion over air pollution, vehicle miles traveled and vehicle occupancy.  Planners should be careful in asserting that compact urban form will produce better results than more expansive urban forms in that regard.  Trip length is a function of acceptable travel time that is itself a function of congestion. Compact form increases congestion and thus travel-time.  People will travel shorter distances but not necessarily in fewer vehicles.  Short trips vs. longer trips makes little differences in air pollution, the majority of the pollution occurs in the first few moments of operation and in stop and go traffic. The fundamental objective is to get more people in fewer vehicles; this lowers pollution and congestion and thus has a positive impact on mobility and air quality.  It may be innovative systems such as demand responsive shuttles being provided by the city of Bend are a way of achieving this goal while living with lower densities. Constrained growth and compact form are not a panacea and may in fact be working against Oregon’s air quality and livability goals.

Optimizing Outcomes and Balanced Goals

Perhaps the greatest quandary presented by the program is how one achieves the right balance of goals.  How does one fairly or correctly determine how much farm land should be converted in favor of lower infrastructure costs, or how much open space should be preserved in the core at the expense of expansion at the periphery, or how many rights of way should be demanded for High Occupancy Vehicle (HOV) lanes to offset lower density preferences, or what exactions should be placed on new development for offices to subsidize housing affordability and maintain a “good” jobs housing balance?

This balancing problem has several important aspects.  First and foremost is the fact that the goals have always been portrayed as equal but in reality have not been developed or administered with an equal emphasis.  The supremacy of farmland in the priority lands statute is a classic example, as is the noted absence of detailed rule making under Goal 9: Economic Development and Goal 14: Urbanization. The appeal process and the courts have been the method for determining, on a case-by-case basis, the meaning behind the rules and goals; balance is captured in a lawyerly way through confusing case rulings.  The legislature too has attempted to add clarity, one example being the specification of allowable use on exclusive farm use (EFU) lands.

Oregon has gradually developed a complex set of interacting goals, rules, case law, voter-approved measures, and statutes that make up the land use system.  It is a system that I would argue does not produce a permitting or entitlement process that is “clear and objective”.  Interestingly enough it may be that the very safeguards for program effectiveness, provided by voter initiative, the appeal process, and the “goal exceptions” process, have rendered the system complex to a point of perceived, if not actual, dysfunction.  At the end of the day, planning needs to help communities make tradeoffs between goals and balancing present and future community needs.  The tradeoffs are different for different parts of the state and at different times in an ever-changing economy. Finding ways to achieve a better balance of goals, one that is place and time appropriate, is critical to serving the state’s diverse economy.

Jurisdictional Interdependencies

Addressing many of the aforementioned issues is further complicated by the fact that several state departments, other than the Department of Land Conservation and Development, have some form of jurisdiction over the land.  Department of Environmental Quality, Department of Transportation, and Division of State Lands all have rules that address land development and conservation.  With separate, autonomous commissions, there exist few mechanisms to integrate the separate departmental strategies at the commission level or staff operations at the customer service level. Despite the efforts of the Governor’s Community Solutions Office, it is indeed likely that a major project proponent could find himself or herself negotiating and trying to meet all these departments’ rules and expectations while no one on the government side has a similar “integration” responsibility.  Trying to determine the likely outcome of these various, and at times conflicting, expectations, while trying to divine a balanced compliance of the goals is a true test of a project proponent’s patience and legal budget.

In all fairness, each of the rules and requirements, taken as distinct elements, seem to make good sense and reduce negative impacts. However, collectively they do not necessarily optimize outcomes.  The state’s land use system doesn’t promote the type of jobs and or development desired, as much as it prohibits what isn’t wanted. The results are, too often than not, inferior development patterns that avoid specific impacts or conflicts or, even worse, complete project abandonment by proponents with huge opportunity costs for the community in terms of services, jobs, and amenities.

Enabling Development

In total, the land development system is more than land use control. It is property taxation policy that encourages certain land uses, as well as income and sales taxation policy that promotes inter-state commuting patterns from nearby Washington. It is a state and regional public infrastructure investment approach that allocates expenditures based on geography, one not necessarily based on optimizing benefit or rewarding good planning. The current financing methods tend to under utilize debt mechanisms backed by property assessments to front-end load development guiding infrastructure.  At worst, it is an administrative structure that provides no point of accountability for promoting good urban design, nor does it inform elected offices on how best to analyze and integrate policy across all taxation and infrastructure investment policy.  A great deal of confidence has been placed in the single notion that compact urban form and constrained growth as predicted by the historic rate of growth will be an adequate guide to an optimal pattern of land use and economic development.

Complicating Factors

Moving toward a more rational and outcome-oriented approach for optimizing performance of the state land and economic development systems in attracting and retaining economic activity, while at the same time achieving other goals, such as those listed under Kitzhaber’s “Quality Development Objectives,” is complicated by several factors. Many believe that this is a winner take all proposition; one is either for resource protection and sustainable development or rampant expansion and the devastating reality of unbridled sprawl.  A false dichotomy of geraniums or smoke stacks has taken on epic proportions in the fertile environment of Oregon politics.

These settled patterns for understanding choices and tradeoffs might be exacerbated by the nature of the land planning program’s built in reliance on appeals and the courts.  The appeal process and dependence on the courts to interpret the law focuses the debate on what is meant rather than what is needed. The highly legalistic nature of the system and its history has constrained Oregonians view of what new policy may be.  There is nothing sacred about any of the rules or the statutes. These constructs were created in part to respond to current conditions; undoubtedly if authored today, they would reflect a present day systems view and would address some of the issues discussed in this paper.

The world we live in has changed markedly since the planning program framework was conceptualized.  To compete for a share of the global economy Oregon needs to be able to provide rapid responses to highly variable development demands in terms of land use and location.  Local decision makers must be empowered to make binding commitments that represent their best judgment as to tradeoffs across goals or they will find themselves at a disadvantage when compared to jurisdictions in other states.

This is an age in the realm of community building where velocity of decision-making has overtaken the value of extended deliberative process.  Entities and jurisdictions that are unable to adapt quickly soon find themselves marginalized.  Local decision makers are best equipped to make the tradeoffs between goals and find the right balance for their community between impacts and benefits, now and in the future, across environmental, social equity and economic dimensions.  Optimizing outcomes has everything to do with how one weighs the costs and benefits.  The state’s role is served when these choices are made at the local level in an informed open and decisive way holding true to the programs values of clear and objective standards.

The difficulty in changing policy in this manner is amplified by the settled nature of the bureaucracies that were formed to protect them.  Not only are administrative functions responsible for integrating across policy areas absent, administrative structures that promote incentives, embrace change, and constantly seek to modernize are virtually non-existent.  To the contrary, the combination of populist forms of commission centric governance seeking to appease and not optimize, decreasing funding driving programs to dysfunction, increasing constraints from legalistic complexity burdening every effort, and the self preservation instincts of highly specialized bureaucrats seeking to secure a steady job collectively create a situation where proactive change is unlikely even at targeted levels and certainly not at all likely at a systemic level.

Some have labeled this type of embedded mechanism for self-perpetuation and protection as a “congruence trap”. This is when, in the natural life-cycle of a an organization, the strategy, structure, processes, rewards and metrics, and people are so tightly aligned and knitted together through formal and informal connections that change is highly unlikely.  One of the most alarming aspects of this type of congruence is the deep level of personal commitment that it breeds and sustains. Professionals have been fighting for a cause so long they have a hard time elevating beyond historic disagreements to see the situation from a new perspective and to drive toward new shared gains. Indeed, many state agencies have been in a defensive mode for so long they have resorted to less than transparent reporting on their finances and activities in the name of better serving the public interest.  It is a troubling development when funding can not be readily reconciled to advertised work programs, let alone be shown to actually relate to outcomes that matter.  The point being that transparent budgeting linked to outcomes is a powerful strategy for dealing with the congruence trap.  It allows if not requires decision makers to evaluate the efficacy of activities that may have outlived their usefulness.

The bias toward perpetuation of existing programs can be seen in most dialogue about change with insiders. When queried about potential policy shifts in most state government, a typical  “insider” response is “what is the proof that there is a problem?” This response is, in fact, the problem.  Life long program advocates are so accustomed to a regulatory and reactive worldview and specialists are so deeply nested in their programs, protecting limited funds, they cannot even begin to imagine a more proactive role. Acting as a leader in designing activities to attract investment and support the creation and retention of local wealth is beyond the sight of this type of bureaucrat.  The default position is that this type of innovation is someone else’s job.  The illogical and unanswerable request for proof of a lost opportunity allows one to go deeper into denial masquerading as commitment.

The energy that is available for improvement has by default and necessity been focused on very narrow and important issues, such as expansion of the growth boundaries and a few highly conservation interest driven goals.  The development dialogue has been reduced to a debate on the historic rate of growth and how much a jurisdiction may reasonably expand its land supply.  Enabling development has been reduced to the best effort of well-intentioned members of government trying to convene regulators to tell project proponents which hoops they must jump through.  The notion that enabling development has anything to do with the proactive creation of an attractive and profitable opportunity for award wining projects that may occur as rapidly as the market will warrant is totally absent. This, however, is exactly the image that regions are trying to convey in order to compete successfully in a global economy.

The implicit argument here is not to alter the statewide planning goals in any way that their original intent is compromised, rather it is instead to gain clarity on the performance of those goals and allowing the market place to figure out how best to achieve required results. The Oregon land development system has resulted in a complex framework of limited and politicized investments, highly controlled land supplies, and inadequate mechanisms for the predictable supply of land development and servicing infrastructure. The result is that project decisions are subject to unknowable appeal outcomes, adding cost and delays to development, and ultimately hindering economic development. Understandably those seeking a different reality have tried ballot box initiatives and gradual de-funding of the state-planning program to loosen controls and cause some form of reinvention. Unfortunately the de-funding, while eliminating expanded policy ventures, has also eliminated resources for policy and operational streamlining. Even more ironic is that the most recent budget choices at DLCD have been for the preservation of staff at the expense of funding for local planning grants, thus working against the interests of those seeking to de-fund the department.

The combination of the legalistic nature of the program, the commission driven form of policy leadership, the cost of amending and or even analyzing the entire system, the inadequacy of resources, and the fear by some that any reform efforts might leave Oregon worse off, has resulted in modest change and a program seen as increasingly out of sync with the needs of many communities and the state’s economic recovery. Most alarmingly it is a program grossly under funded to perform its duties and completely incapable of undertaking a radical reinvention to adjust to operating with less funds for the long haul.


Oregon’s land and economic development systems have evolved over time and are complex, multi faceted and reflective of forces that have both endured and changed.  The shift in the state economy away from a resource economy to knowledge and service economy is profound and continuing and yet state land development policies seem not to fully reflect these changes. As currently designed and utilized the constrained-growth, infrastructure investment, land assessment and development regulation strategies have numerous unintended consequences.  There is a need and will to manage growth to achieve both resource protection as well as economic development objectives.  Oregon needs to rework its growth management strategy to emphasize development planning consistent with community economic development objectives and quality standards and allow the market to determine how quickly and exactly where the development should occur.

The challenge is both technical and political. Embedded strategies such as the supremacy of farm protection have displaced original goals of balanced conservation and development.  Land prices held up by overly constrained supply need the discipline of an open market.  Pricing of land as a residual will result when development standards are explicit.  Residual pricing and abundant supply of serviced land is needed to support economic development.  Addressing these issues is complicated by an absence of objective and change oriented leadership that will endure the pain of de-funding existing programs and dislocating established and powerful networks. The current misalignment of the land development and economic development systems works against wealth creating investment and increasing prosperity. Achieving a better alignment of the land and economic development systems is addressed in the following section.

Part II – Suggested Improvement Initiatives

Purpose and Goals

Oregon’s anemic economy has prompted many public leaders to move economic development to the top of the public policy agenda.  Improving government performance in facilitating economic recovery requires a broad and sustained effort by those charged with guiding policy for the land development and economic development system. To guide strategic selection of improvement projects and help ground public dialogue to high-level outcomes the following objectives are offered:

  • Create a prevailing image of government at the state and local level as development enabling not just regulatory
  • Authorize strong local decision making for community development that provides a distinct balance of economic, social equity and environmental goals
  • Create effective management systems that support public service at the front line, dedicated to achieving results
  • Recognize proactive problem solving assistance in public employees to establish a culture of service in public agencies.


Pursuing these goals, in the face of scarce resources, varying degrees of support, and divergent views on the role of land use planning, requires an approach that carefully sequences select tactical actions. Early wins are needed to build new networks and capacity. This sequential approach also must address the inter-relatedness of land use policies and operations to ensure that the outcome is a systemic solution. The magnitude of this challenge and resource constraints suggest an approach that is both short term and focused, taking advantage of immediate “quick win” opportunities, as well as more of a long-term and systemic continuous improvement effort.  Such actions need to achieve the following:

  • Frame the dialogue.  Initiate development forums to illuminate the benefits of growth, shift public dialogue from a more defensive, resource protection stance to a more proactive, responsive dialogue concerning the states economic prosperity.
  • Broaden the base. Put policy and organizational improvements on a fast track with the goal to serve urban and rural development more efficiently.
  • Attract and develop leaders. Use gubernatorial appointments to install leaders that will facilitate change in thinking about growth and development.
  • Utilize external forces to reset directionBalance long-standing staff roles and self-interest with turn around appointments and blue ribbon committees.
  • Create more carrots and use fewer sticks. Link state investment “rewards” to local development objectives.
  • Establish a service orientation.  Redesign organizations  to provide seamless service anchored in cross-functional results oriented teams.

Top Three Initiatives

The longer-term system improvements needed include both policy and organizational changes, local and statewide, minor and major and will require broad based leadership. It is imperative that work is started immediately, in response to the state’s interest in economic recovery.  While improvements must be considered as a whole to capture interdependencies, it is also clear that successful implementation will necessarily be incremental, addressing pivotal issues in a systematic way. These factors suggest that the actions outlined above be vetted through a duly authorized task force, convened and staffed to produce and oversee an improvement master plan.  Such a master plan should consist of efforts drawn from, but not limited to, the following three initiatives and high priority actions:

  • The Competitive Land Supply Initiative: Radically increase the availability of well planned and well served land needed to create and support a vibrant economy:

·Expand all regional UGB areas with 50-year mandatory urban reserves,

·Eliminate the priority lands statute,

·Design assessments to promote highest and best use not speculative holding.


·   The Development Predictability Initiative: Increase the probability of desired outcomes for land development that delivers on the state’s economic development objectives and community development visions:

·    Prioritize plans and financing for major public facilities and infrastructure,

·    Upgrade LUBA’s ability to act as the court of final determination,

·    Eliminate wetlands without mitigation permits from land supply inventory.

·    The Planning, Efficiency and Accountability Initiative: Reorient the culture of state and local government to be more development enabling and less regulatory:

·    Eliminate periodic review,

·    Consolidate key agencies into an Oregon Development Planning Authority,

·    Prepare performance-based measures for determining goal compliance.

The Competitive Land Supply Initiative

The Competitive Land Supply Initiative assures an ample supply of land for urban and rural economic development.

The purpose is to rapidly implement a series of organizational and policy improvements that assure jurisdictions of Oregon provide a nationally competitive supply of land consistent with local and state economic development objectives.  Competitive supply requires that land be:

·     Of ample quantity to support fair pricing,

·     Fully serviced, or have in place the funding and plans to be fully serviced, within a customary development period,

·     Geographically located to allow future industries to build on, and take advantage of, known and or emerging clusters,

·      Located either near existing or planned complementary uses that support balanced communities, and

·      Of a size and configuration, and zoned consistent with the prevailing pattern of development, for the product types being sought after by the state and jurisdiction.

Improvements to organization and policy that support this initiative include:

1.      Expand boundaries based on quality, not rate, of growth.

The purpose of growth boundaries should be re-defined as a concept to provide a clear vision of where and what type of growth each community envisions for the next 50 years of urban development.  The rate of growth as a determinant of land availability should be reconsidered in its entirety.  Prescribing the exact type and rate of urban growth places too much responsibility on land use planning as a construct.  To ensure that the built environment ultimately represents quality urban development, elected officials and civic leaders must take a more proactive role.  They need to formulate economic development strategies that will drive the type of community development that effectively responds to current issues and opportunities.  The growth boundary should provide a range of opportunities for the accommodation of these community development nurtured markets.

The state should require regions to identify land equivalent to the current developed area to be urbanized over the next fifty years (approximately an annual 1.5% growth rate). The current land use system allows for and enables regional planning already.  “Regional Problem Solving” legislation, the Metro model with its recently adopted “Sub regional rule”, and the state wide rule allowing for urban reserves are all distinct mechanisms supporting regional planning. Metro has led the way in tackling regional planning but has fallen short of producing the type of “50 year regional plan” advocated by former Metro executive Director Michael Burton.  His message is as true for other regions as it is for Metro; regions should collaboratively decide how best to allocate the planned growth by type and location.  The emphasis should be on the vision driving those plans, and public investment necessary to make them a reality, rather than on the nuances of incremental growth.

Fiscally constrained facility plans with cost estimates and funding plans should be required for any land that is “converted” from “urban reserve to urban.” It is important to note that urban reserves are an existing concept currently allowed but not widely understood or used and not in the way being suggested.  Jurisdictions should place development standards on the parcels urbanized to assure that they may not be developed for less intense uses, or subdivided in a manner not called for in the locally adopted urban reserve master plan.  Mitigation for impacts should be accommodated by scheduled payments, transfer of development of rights (TDRs) or direct performance on site, or any combination of the above and should be established in a clear and objective manner in a “conversion” decision.

2.      Establish enabling legislation for community service fee assessment and bonding.

Many communities struggle with how to pay for basic civic services such as schools, libraries, fire protection and police, not to mention land development infrastructure such as roads, water and sewer.  The limitations on property tax increases and a traditional approach of basing fees on average costs doesn’t always set the stage for new development paying its fair share. When system development charges are used it is not always clear what they will be, and in fact that they can, and often do, change in the course of a project’s entitlement process. The charges can change for example between planning approval and building permits.  Furthermore system development charges are not currently structured to maximize the ability of service providers to utilize local improvement districts as a means to bond and in investment for both land and civic services.  State legislation that prescribes a bulletproof approach for calculating fees for civic and land service infrastructure may be needed. Oregon currently treats these types of fees differently and only infrastructure costs may be covered by development service charges.  Establishing payment streams to maximize bonding potential, and providing a state pool of funding to maximize access to the capital markets would allow investment to precede development and serve to guide economic development.

The notion that assessing development for its fair share of capital improvements, priced as marginal and not average costs, needs to be made explicit. Many have resisted this approach for fear it will drive up the cost of development.  In fact the cost of development will likely remain the same; as it is set by mainly fixed variables, the land cost will by necessity go down. The land value is the residual after all development costs are accounted for and the final market value established.

3.      Institute industrial development as an allowable use outside the UGB.

Agricultural activities have aptly been described as “factories without walls.” The introduction of residential and high traffic commercial activities near those uses is truly problematic and needs tight control.  Farms may appear as pastoral landscapes but they house caustic substances and dangerous equipment that have the potential to conflict with house pets, commuter traffic, and interested on lookers associated with commercial retail and or residential use. However, distribution centers, with very limited types of commercial interface and absent the types of conflicts mentioned above may be ideally sited in a remote location or adjacent to farmlands.  Distribution of goods has become an increasingly vital part of all regional economies as more efficient ways are found to link up to global supply chains. Changing the rules to promote location of distribution centers in rural areas would also seem to support ODOT goals of redirecting traffic away from impacted urban areas.

Businesses do not necessarily choose to deliberately locate distribution centers in high cost urban areas.  Unlike commercial users, adjacency to a specific market is not a primary site selection requirement for distribution operations.  To the contrary, central locations with easy access to many routes and multiple urban centers are more valuable. Establishing distribution centers as conditional uses on rural lands, with a set of specific findings to assure minimal impact on farming or forestry activity, would allow for many regions to more easily and competitively accommodate these increasingly critical supply centers.  Whatever the marginal cost of providing supporting land development infrastructure should be assessed to the project; the market will determine when infrastructure cost is worth the locational benefit of being outside currently serviced land within a UGB.  Many of Oregon’s mill sites are outside of UGB’s and are in marketable areas and could benefit from this common sense approach of letting the market drive location and using exactions and regulations to avoid and or mitigate impacts.

4.      Create statewide enabling legislation /rules for planned district ordinance (PDO) at local level.

The entire statewide land use program is predicated on the availability of land zoned and serviced for uses that match communities’ expectations and market place demands. Despite the best efforts to keep plans updated, timely conversion of land to meet market demands continues to be elusive.  The consequence is that most major investment opportunities require plan amendments.  That local process triggers state review and appeal vulnerability in terms of compliance with any of the statewide goals.that every amendment represents some judgment in how best to fulfill   It is fair to say all the goals.There can be disagreement – between local government and the   developer, between local government and any number of state agencies, and between state agencies themselves – on whether or not the goals have been duly served by the approval of a plan amendment.Resolving these disagreements adds time to the process.  In extreme cases, unresolved differences can trigger numerous rounds of appeals and accommodations that lengthen the timeline for achieving land use decisions, increasing the cost of development.appeal and court decisions are not a typical outcome of the While development process, there is little doubt that the possibility of lengthy delays discourages many parties from even considering the initial round of investment.

One approach to deal with this is to establish state wide enabling legislation that would allow local jurisdictions to issue discretionary permits under a planned development set of regulations.  These planned developments would not require plan amendments and the local decision would be a permit decision not a land use decision subject to appeal. The enabling legislation or local code would establish state pre-approved development standards that clearly set out objective measures of conformance by development type such as industrial, commercial- office, residential, institutions, commercial-retail and mixed use, and provide dynamic requirements that adapt to site parameters.

The economy and market place are much more dynamic, subject to rapid growth and decline, than is the current system for making land use decisions.  To be competitive with other states that can deliver solid entitlements in shorter time frames Oregon needs to change the appeal process. Greater discretion must be vested in local authority to allow for more flexibility and quicker turn around of appeal proof land use decisions. Some mistakenly believe that if the controls are equally restrictive across the state that Oregon will capture its fair share of the national recovery. To a certain extent this is how the state revenue-forecasting model actually works and the problems associated with this type of allocation-based modeling are apparent.  The reality is businesses do not have to choose to locate in Oregon; businesses have, and will continue to locate elsewhere if the state’s policies are seen as too restrictive or the development process too cumbersome.

5.      Invest in standard zoning templates to allow clear and objective standards.

The land use system is predicated on the notion that land is available and suitably zoned to accommodate future growth and fulfill a community development vision.  This requires that the zoning provide development standards that reflect community design preferences and still allow a degree of flexibility for the property owner in responding to market conditions. Flexibility with certainty can be achieved through careful design of parametric development standards or “performance” zoning based on targeted development prototypes.  This type of performance zoning is expensive to prepare but not that expensive to implement.  In total, standardized forms of zoning tailored to promote targeted types of development would reduce cost and time for local and state planning efforts.  It is a prime example of work that should be authored or commissioned by the state and made available as a template for local jurisdictions.

6.      Eliminate the priority lands statute.

The priority lands statute currently requires that urban areas expand onto and exhaust all non-resource land prior to expanding onto resource land.   This is a clear example of how the goals that are supposedly equal are really not: Goal 3 now trumps any other goal because of the supremacy of the priority lands statute. Decision makers should approve the inclusion of land as part of an expansion based on the contribution of the expansion to the fulfillment of a community’s vision.  If that vision includes preservation of an agricultural preserve within or adjacent to the boundary, than that preference should be reflected in the local decision-making.  Local choices for expansion and accommodation of patterns of development that serve a community’s economic development and community development vision should not be subordinated to the availability of non-resource land or the inferred benefit to the state of preserving agricultural or forestlands.

Expansion of the urban economy is dependent on an ample availability of land in the area where the market demand aligns with the community development vision.  The preservation of any or all resource land adjacent to existing urban areas is an unworkable and unhelpful constraint.  A cursory review of the $3.7 billion dollar agricultural industries’ contribution to the state’s gross product leads one to an inescapable conclusion that the economic benefit derived from the preservation of a few 100,000 acres of resource land adjacent to urban areas is in all likelihood overwhelmingly exceeded by the economic benefit afforded by the expansion of the economy housed in urban areas. In point of fact, the $150 million in annual tax relief afforded to owners of over 16 million acres of agricultural lands, which produce negligible margins currently found in taxable farm operations, is in and of itself difficult to justify from a wealth creation perspective.  Taking into consideration the impact on the urban economy of constrained land supply to critical industrial clusters and the level of economic benefit derived from the current farm use the priority lands statute clearly works against economic growth.  The state is using EFU designations as if farmland were open space with a false comfort that there is an economic justification.

7.      Align tax incentives with managed conversion for holding EFU land.

Current state statute 308A.050 adopted in 1967 allows farmland to be assessed at its value for farm use instead of its value at its “highest and best use”.  The statewide impact of this statute on property receipts was estimated for the ’01- ‘03 biennium at approximately $125M.  This is important for several reasons. Tax receipts are a critical revenue source for local government in providing for infrastructure and services that support economic development.  This loss needs to be assessed in terms of its power in supporting the gross revenue of all agriculture statewide and the income to the state from taxable profits. The exemption is in fact a way of locally subsidizing farming to create jobs and taxable income.  These revenue flows to the state may in turn be allocated to achieve economic development objectives.  The net effect of the tax captured at the state level from agriculture and the tax lost at the local level from exemptions appears to be a net loss.

Another and perhaps more important linkage of this policy to economic development is the fact that land held inside the UGB continues to enjoy the agricultural assessment. Thus the state is subsidizing speculative holding of land that it has designated for development.  Alternatively, assessing and taxing such property for its highest and best use is a tried and effective means of driving land to the market. Subsidizing speculative holding of land inside the UGB or urban reserve, land that the community has planned for other uses, is inconsistent with the program’s goal of efficient use of urban land.  The speculative holding produces aberrant pricing because of the ability of a small set of landowners to hold out for high land prices knowing that they are the only choice for local growth, even if local long range planning policy indicates otherwise.

Removing the farm value assessment for land within the UGB or urban reserve will help the market function more effectively and drive land to its most economically productive use sooner.  For this type of scheme to work the urban reserve provision would need to be much more widely utilized. . Currently the most destructive speculation is at the fringe where a few property owners can hold a community hostage to their pricing demands.  Urban reserves are a more refined mechanism for establishing where growth will occur over a longer planning-horizon.  Urban reserves provide more certainty, enable identification of a wider range of development opportunities, promote efficient markets (competitive supply) and allow more accurate property assessment based on allowed use; there utilization would drive prices down and support higher levels of investment in development projects.

8.      Align tax policy and allowable uses with competitive farming policy. 

Tax valuation for farmlands and farm homes is a critical component for making farm operations feasible.  However, the assessment privilege should relate to the income-based revenue generated from the farm as calculated over a reasonable multi-year cycle.  This level of scrutiny is essential in driving farmland and farm home ownership to support truly competitive and profitable farming and not simply a subsidized “gentleman farmer” life style.  This approach combined with greatly restricted uses on land receiving farm assessment privileges will work to provide more land available to commercially viable agricultural operations.  The EFU list of allowable uses should be radically reduced and those wishing to pursue other uses in rural lands should avail themselves of the allowances under rural residential or rural commercial zoning options.  Rezoning for these prescribed purposes should be greatly simplified and be disallowed if they would create dysfunctional conflicts to adjacent agricultural activities.  The state should create prototype, or at the very least minimum, pre approved standards for infrastructure serving rural development and institute mechanisms to assure the full payment for permanent extension of urban services.

9.      Develop enabling legislation for revenue sharing and regional governance.

The tax system in Oregon, as in most states, makes local government highly dependent on revenue from land assessment.  Several factors drive the flow and benefit of funds to the local government. First and foremost is the method of valuation and the caps on assessment and rate set in place by state statute and voter measures.  It is these factors, along with the requirement of providing basic services such as fire, police and schools place local government in the mode of searching for development, that will generate more in tax flows than the subject property use would consume.

Residential development, with only a few exceptions in the high-end category, produces greater service demand than the assessed valuation and rate will support.  Thus communities search for the higher valued commercial and industrial uses that come with lower service requirements. This is generally referred to as the “fiscalization of land use”.  The Oregon planning program is set up on the notion of directing uses in a way that actually strives to achieve other and perhaps more important livability goals, such as providing a suitable mix of housing and encouraging mixed use. These land planning goals and the “fiscalization of land use” often works at cross-purposes.  Communities want a well-balanced mix of housing, services, stores, and schools, yet the tax system drives local governments to favor commercial and industrial users that create a larger local tax base.  A proven way to optimize local land development choice based on livability is to regionalize the tax flows from new development through a form of regional revenue sharing.  This form of collaboration can help avoid destructive practices of intra-regional competition for new development and allow land planning to be driven by vision and livability, not solely by fiscal necessity.

10.  Target policy to enable re- development.

Many times the available land in the inner city is priced such that it is not readily feasible for development, which in turns drives expansion to the periphery.  It is a common misconception that the tightly constrained supply of land will force development to the center.  Unfortunately constrained supply may only sustain unrealistic prices and drive investment to other jurisdictions.  Maintaining an ample land supply at the periphery and maximizing the utilization of historic core areas are not mutually exclusive goals and can be mutually reinforcing with the right combination of policies..  Redevelopment financing has historically played an important role and has been fueled by redevelopment area tax increment cash flows.  Unfortunately, this tool has fallen to sub optimal levels because of other statewide property tax limitations and the statutory limitation on redevelopment project areas as a percentage of the total jurisdiction. Amending the redevelopment project area size limitations currently capped at 15% of the jurisdiction’s land area and or the state wide assessment limitation for land within a redevelopment project area could reinvigorate this powerful tool for maximizing availability of marketable sites in the city core and preserving land at the periphery.

Many jurisdictions have experimented with other tax and financial incentives and these are worthy of consideration.  Among the most powerful are property tax structures that drive land to its highest and best use and militate against speculative land holding. This approach is generally referred to as “land value” taxation where one pays based on the highest and best allowable use, not the current use, with the effect of pushing land to its planned use and penalizing speculative land holding.  Another tool is transfer of development rights (TDRs).  TDRs could be used with extreme effectiveness in Oregon because of the low basis of property being included within the Urban Growth Boundary.  This approach would require properties upon inclusion into the urban growth boundary to purchase part of their development rights from designated inner city properties.  Such a process can bring down the market price of inner city properties and allow more expeditious and fruitful consolidation by a redevelopment agency or purchase by a private party.  This would require multi-jurisdictional development banks and probably some enabling legislation by the state to establish transfer guidelines and protocols.

11.  Reconsider the approach to development and conservation of EFU land.

Any serious examination of agricultural economics brings one to the conclusion that the state must be ever vigilant in maintaining the lowest possible cost structure for commercial farming if it is to sustain this vibrant industry.  The problems of conflicting uses on farmland are legion; the proliferation of allowable uses on EFU and the demand for rural residences are a root cause.  To address the complex issue of both making farming more affordable and making non-farm activities less intrusive several options bear consideration.  First and foremost should be to provide an even greater tax relief for EFU lands that are dedicated in perpetuity for agricultural use.  A fast track mapping of strategic farm reserves needed to sustain regional niches, such as canola oil, methanol or wine production, needs to be developed so that qualified landowners can be identified and encouraged to take advantage of the full tax relief. Conversely, lands not so designated should be reexamined in terms of their value and the associated entitlements to an agricultural assessment, allowed use, and development standards reassessed.

Collectively these adjustments will make farming more profitable and may help deal with the property rights issue for “secondary lands”.  The debate about property rights for these “secondary lands,” zoned for agricultural use but not truly viable for such use, has consumed a great deal of energy and state resources with little resolution.  Perhaps this approach of more clearly establishing definitions for what is truly farmland vs. rural land, as balanced against other development opportunities, will help bring clarity and closure to this issue.  Landowners will have a choice to dedicate their lands to farming in perpetuity and enjoy full tax relief with very limited development rights or secure non-EFU designation and pursue the highest and best use commensurate with regional plans for rural lands.

12.  Update annexation and incorporation laws to balance no growth forces.

Balancing no-growth and smart-growth forces has always been part of the rationale behind a “rate” based approach to UGB expansions. If the state chooses to use a regionally determined distribution of “reserve” areas some may argue that the market forces may still be muted and or misdirected.  One option to address this concern would be to revisit the annexation and incorporation laws.  Amendments could be designed to assure the possibility of new satellite cities where demand warrants and property owners are desirous. Additionally owners of land that are in a reserve for an urbanized area should be able to purchase services at a scheduled rate regardless of the decision for annexation. This would require changes to the special service district legislation as well as the incorporation laws.

The Development Predictability Initiative

The Development Predictability Initiative achieves a high probability of desired outcomes. 

The purpose of this initiative is to rapidly implement a series of organizational and policy improvements that assure jurisdictions in Oregon provide a permit environment that allows participants to have a high degree of certainty. Project proponents need to be able to know that there is a high probability of specific outcomes associated with land identified for prescribed uses.  The initial promise of the Oregon land use system was that it would be free from the endless analysis of “environmental impact statements” used in other states, and would regulate a more constrained land supply through “clear and objective standards.”  The challenges have been, an continue to be, those of keeping an adequate supply of the land, assuring that it is appropriately planned and zoned to support the communities’ vision, and regulated with clear and objective standards that work in the marketplace. The appeal process has proven to be an expensive and unpredictable route to resolution of local decisions that try, but ultimately fail to equitably balance the interests of parties who find fault with the decision process or the application of the standards.

Improvements to organization and policy that support this initiative include:

1.      Rework appeal process to limit vulnerability of local choices.

The current paradigm assumes that local choices for plan amendments are sustainable based on material conformity to goals, while in fact many amendments are remanded on grounds of process and or interpretation of goals as they relate to an amendment.  Clear standards for goal conformity based on performance are needed to assure a knowable outcome.  Major projects will almost always involve an amendment to a local plan and such amendments will be reviewed against state law and held up to scrutiny by state agencies or other parties. The likelihood of appeals by one or more parties is difficult to predict.  Another factor in the approval process is the cost of documenting findings to support a decision by a local government or state agency (to avert the threat of appeal).  For example, detailed and extensive planning requirements (typically administrative rules or statute requirements) may be time consuming, and thus costly, to address and because of their complexity may have too many “pitfalls” for some local government to navigate successfully. Housing and protection of riparian zones are two such areas where the intentions are good but the ability to easily establish compliance is difficult. If a local government demonstrates superior performance in specific areas, based on prescribed standards, it may be unnecessary to apply the detailed state planning requirements to the review of their decisions.  There should be some performance-based mechanism by which one can determine if the local government meets or exceeds requirements through other means than meeting the “letter” of the law.

2.      Establish LUBA as a court of resolution of last resort.

Many of the policy tensions are not successfully resolved at the local decision level.  The system is set up to allow these items of process and substance to be appealed to LUBA.  Critics of the program question the value of the 90-day decision making requirement on land use actions because of the nature of the appeal procedure.  Items may be appealed on any number of procedural or substantive counts as long as the party raises them at the local level and has standing.  While evidence suggests only about 1% of actions are appealed, critics point to the cost of appeal due to the legal defense necessary and the inability to get a final decision at LUBA.  LUBA may simply sustain the action or remand it back to the local authority.  Decision items may be remanded strictly on process thus starting the cycle over.  In other words, getting a decision in 90 days doesn’t mean getting resolution.  Because of the complexity of the process and record keeping burdens, developers see the time and cost of a possible appeal as a significant risk.

Several tools may help improve the appeals process while protecting the right of appeal. Examining the appeal filing fee and the process for recovering costs by the prevailing party, as well as developing a stricter set of guidelines for what may be appealed, are all suggestions worthy of consideration.  Finally, LUBA must be empowered to truly act as a court of last resort. Decision items should be required to go to arbitration first with final decision-making authority vested with LUBA so that this body could actually remedy a given situation by amending the local action.

3.      Remove wetlands without mitigation plans from usable inventories.

Success in assuring that Oregon has an adequate land supply is based in part on knowing what land the state currently has zoned for each use. Much of the industrial land in Oregon follows the railroad tracks, which follow the streams, which map very closely with wetlands.  This land is highly impacted and is probably not available for development in the near future if at all. An inordinate amount of energy is spent at the state and local level in trying to market this type of land. Removing industrial zoned land impacted by wetlands from inventoried land would be a good step in being clear about what is actually available and in better targeting marketing efforts.  If land is zoned for development and the land is also listed on the state’s list of wetlands or the national wetlands inventory, the land should be removed in its entirety from inventories used for planning purposes until such time as a detailed map is in place and a state issued wetlands permit has been obtained.  The current practice of removing sensitive land only after it is protected is hardly a viable choice for the landowner that wants to believe that persistency will someday afford them the opportunity of some allowable use. Continuing to include the wetlands-impacted industrial sites, or any Goal 5 impacted lands, as part of the inventory of available buildable lands is completely misleading and is particularly unwise given the state’s use of a constrained land supply as a policy tool. For example a UGB constrained land supply directs the development to the industrial parcels that are zoned for the targeted use but are not truly available.  This scenario produces wasted marketing, frustrated investors and a false sense about the adequacy of land supply.

4.      Establish training institute for public and private development professionals.

A thorough examination of most failed development efforts illuminates a recurring pattern; proponents take what they believe to be the correct entitlement and permitting route, only to find out latter that they probably did not.  The problem is not peculiar to Oregon or to the state goal compliance issue.  It is, however, exacerbated by the complexity of the process in Oregon. The many different ways rules, statutes, and case law can be used in combination {and legal arguments made that a process was flawed or a decision was wrong} can yield many false starts..  A typical scenario would be where local builder endeavors to take a fairly straightforward development proposal through the process.  After investing in full working drawings to submit to the planning department for a building permit, he finds out he actually needs to first deal with the environmental section since a wetlands permit is required.   This new information may completely alter the site plan and render the working drawings worthless.  A more complex illustration of a misguided process is where a sophisticated public agency with a well-versed land use attorney seeks an exception from Goal 14 (Urbanization) for an urban use outside the UGB.  The exception is justified given the development program but the record shows that part of the project is not declared critical to the development and thus does not warrant an exception.   A small rural family that wants a home on EFU land that is not farmable and seeks a reasons exception instead of an irrevocably committed exception also runs into procedural difficulties due to the seemingly inflexible and unwieldy process.

There are no simple fixes. Simplifying the processes and delegating as much authority to the local level to make appeal-proof decisions will help.  Publishing an understandable users guide showing how to get through approvals for high frequency types of development would help.  Another creative solution is instituting an “e-permit” on line tracking solution available from the state acting as an application service provider (ASP).  Requiring pre-application conferences for larger projects and designating a lead agency and single point of contact for all government permits would also help landowners and developers.  An approach with perhaps the greatest impact would be state sponsored training for public and private sector development professionals.  It is vital that planning and development communities are brought together to build a shared understanding of the system and, more importantly, a network of relationships that represent the true public private partnership.  This type of a collaborative environment of is needed to support globally competitive regions.

5.      Reconsider resources for state and local boards and commissions

Boards and commissions at the local and state level play extremely important roles in making the land use system function effectively.  Providing support for these entities is critical in many regards. Some of these entities lack the resources to identify which path to take to assure that a valued project will be sustained on appeal.  Some lack the resources to keep the record that is needed to sustain appeals and end up developing an unhealthy reliance on state assistance, through grants or personnel, as a way of gaining good records and technical assistance. Others excel in the quality of their decisions and process but miss opportunities for greater gains because of the lack of information about other state sponsored activities that they could leverage. Many of the state commissions seem to ask too much of the individual volunteers in terms of serving in management oversight, policy setting, and quasi-judicial capacities.  Resolutions to this capacity dilemma could be found by relying more heavily on gubernatorial director appointments to assure that policy setting is driven by the governor and by further limiting state participation in local actions.  LCDC, as one example, might choose to end periodic review and only participate on local plan amendments through technical assistance and grants and the occasional appeal to LUBA. LCDC could also delegate hearing authority to the director on many more items than is currently the case.  The current approach of using volunteer commissions such a s LCDC, who’s members receive little training and limited support to take broad public input, make strategic policy choices, render quasi judicial decisions and oversee budget and operations, may be asking too much.

6.      Provide priority funding for functional plans on ports, rail, roads and universities.

Major public projects need to be seen as a priority, even if funding is not a certainty, in order to attract outside investors to the state.  Maintaining high quality facilities and infrastructure, and promoting strategic new projects, are important to sustaining existing Oregon industries.  Additionally the cost of providing these projects is substantially increased by the inability of agency proponents recognize what the state’s interest is, or how the expertise housed in the specific agency can be leveraged to successfully execute the targeted project. An approach for improving this situation is to require that major facility holders, such as ports, prepare strategic plans indicating not just how they will grow revenues and profitability, but how best to direct resources to grow the Oregon economy. These seemingly similar objectives – increasing profitability and effectively directing resources – are in practice quite different and result in very different land plans.  Railway and roadway priorities also need strategic plans that look at how they contribute to the long term movement of goods and people consistent with the long term performance measures attached to all planned urban areas including the newly identified urban reserves. Universities and other institutions need to be evaluated based on their ability to generate long-term support for emerging industrial clusters in terms of knowledge and educational attainment. These different types of functional plans at the state level need to be given greater standing given their linkage to economic development.

Authorship of such plans could be accomplished in part or in partnership with a new “Office of State Planning and Research – OSPAR”.  No agency in the state currently has overarching responsibility for seeing that functional plans are prepared, that they are strategically integrated, reflect the economic development agenda of the state, and conform to the state planning program’s 19 goals. Enhanced functional plans of this type would provide greater predictability of future public investment and thus provide greater certainty for those promoting the full range of related public and private projects.

The Planning, Efficiency and Accountability Initiative

The Planning, Efficiency and Accountability Initiative seek to achieve better quality planning with scarce resources.

The purpose of the initiative is to rapidly implement a series of organizational and policy improvements that assure jurisdictions in Oregon deploy very scarce resources in the most effective manner possible. This requires that key services provided by jurisdictions be reviewed in light of their impact on critical economic development activities. Ideally, all services would be streamlined, but the first round of improvements should target government processes that link back to the most important private sector development initiatives as prioritized using economic development objectives.  Streamlining these services will involve redesigning processes but also changing the mindset of many government participants from regulator to enabler. Shifts of this magnitude will require training and, most importantly, clear and quantifiable service performance measures linked back to individual and teamwork performance.  This type of focus on doing the right work (and the work right) will require a broad and sustained effort across many processes, professional domains, functional areas, and jurisdictions.

Suggested improvements to organization and policy that support this initiative include:

1.      Focus state involvement in local plan-updates and shift method to results and incentives.

The state program reached a major goal when all jurisdictions completed acknowledgement over a decade ago.  The notion of scheduling jurisdictions for periodic review may not be the most efficient way of assuring plans are updated. A combination of linking urban reserve and key goal performance plan updates with state capital investment and planning grant preferences may be a more efficient way of funding viable and sustainable development.  This requires that priority goals be identified and either performance measures for each be adopted or standardized plan elements be created that could help jurisdictions easily comply.

2.      Provide performance based compliance method for all goals.

The fundamental role of the state in the land use-planning program is to assist local governments in complying with state goals.  The state planning program goals seem clear enough but how one measures compliance has necessarily involved some discretion.  Sorting out the “gray area” between the intent of the goals and how to comply with them has been a source of confusion and at times has required very time consuming, multiple attempts at finding the “right size rock”.

To the extent that performance measures can provide an alternative to detailed planning requirements, local governments can avail themselves of greater “certainty” of plan acknowledgment and less exposure to appeals. Performance measures would also respond to reduced staffing levels by helping staff to identify priority issues, thereby reducing plan review times.  The statewide land use program already incorporates performance measures in some areas, although not in a systematic way whereby a local government can rely on the performance measure to demonstrate Goal compliance.  For example:

·              The Metropolitan Housing Rule, OAR 660-Div. 07 requires local governments in the Portland area to allow 50% of future housing units to be multifamily dwellings and to plan for a density of 6, 8 or 10 units per acre, depending on city size.

·             By statute, ORS 197.301, Metro is required to report every two years to the department on several performance measures, including: development of vacant land, housing density and price, job creation, environmentally protected land, transportation accessibility and mobility, and air quality.

·              The commission’s transportation planning rule, OAR 660-Div 12, contains a performance standard for reduction of vehicle miles traveled per capita.

Local governments have two processes for updating comprehensive plans: post-acknowledgment plan amendments (PAPAs) and periodic review.  Performance measures could potentially be incorporated into these processes in the following ways.

·              The department screens all PAPAs and makes a decision whether or not to participate.  If the department participates, staff reviews the proposal, then advise the local planners and decision-makers on how to better conform to state goals, rules and statutes.  If the department ultimately disagrees with the local government’s final decision, staff makes a recommendation to LCDC to appeal the decision to the Land Use Board of Appeals.  Performance measures could provide valuable information to inform the initial decision to participate and ultimately, whether to appeal or not.

·              At periodic review, a local government first evaluates its plan and implementing regulations to determine whether a work program is needed to amend its plan and regulating codes/ordinances.  To the extent that performance measures can be formulated to measure compliance with the statewide goals, the department could look to the performance measures to determine which, if any, issues need to be addressed in periodic review.  If periodic review were to be conducted in this manner the work of the department could be much more focused and results oriented. In effect the focus would be on what is needed to accomplish measure attainment rather than what to revisit or amend in order to establish regulatory compliance.

This method of measuring compliance in terms of performance depends on identifying key quality metrics related directly or indirectly to each goal. For example housing goals might translate well into percent of housing stock within each economic grouping to provide targets for relative affordability.  Transportation performance might be reduced to maximum percentage % of total miles of arterials at levels of peek period congestion or targeted levels of vehicle miles traveled per capita.

3.      Eliminate Periodic Review and Refocus on PAPAs, standardized elements and fee services.

The recurring theme of the program is one of certainty and predictability based on updated local plans.  This theme requires a drastic reconsideration of either the amount of resources that are made available at the state and local level for this work or a more cost efficient way of keeping plans updated.  DLCD estimated that in 2002 there were approximately 103 jurisdictions in “periodic review” and that approximately 3 per year were completing periodic review.  This means that the phrase “perpetual review” has true meaning; at this rate it would take 30 years to clear the queue, let alone address those coming in each year, as jurisdictions that are by statute add their periodic review to the list.

Suggestions have been made for lowering the threshold for who are required to undergo periodic review and to tighten the filters that focus the review of completed tasks. This approach has already been used in terms of jurisdiction size. Many smaller jurisdictions are now exempt and extending the size waiver any further would seem to bring into question the efficacy of the program. If it is only viable for large jurisdictions, those that typically have the most money, what does that say about the state’s responsibility in other areas? Earlier legislation in SB 543 set up a useful set of priorities and timelines to help prioritize planning efforts and fast track completion of jurisdictions languishing in periodic review. All periodic review work programs need to be updated to reflect 543 priorities.  DLCD should use grant dollars as an incentive assure fulfillment of the priorities.

Additionally if “results” based compliance is established many jurisdictions may be found to be in compliance as long as their performance continues.  Performance measures can also help tighten the focus of the department on what elements and which jurisdictions to target limited grant dollars for PAPAs and for technical assistance and appeals.  Linking provision of other discretionary state funds from OECDD, CST projects, TGM grants and ODOT to attainment of performance measures would serve as an even greater incentive for local action.

Introducing standardized plan elements and planning methodologies for jurisdictions to use would be a way of focusing limited resources on the substance of the updates, not the mechanics. Smaller jurisdictions could be found to be in compliance simply by adopting the standard elements and by following pre approved methodologies for local tailoring of the standardized elements.  All of these approaches will help improve efficiency and place accountability at the local level for determining how best to achieve state goals. Similar to the cost recovery employed by local jurisdictions, all state service for technical assistance should be fee based in order to assure the availability  of staff providing this vital function.

4.      Establish the Oregon Development Planning Authority (ODPA).

Government is always searching for organization that takes the best advantage of scale economies and allows for appropriate specialization with a prudent separation of responsibilities.  These desires are often in conflict as is the case in Oregon where the scale of operations and geography tend to dictate departmental consolidation with regional offices.  However the specialized nature of many services and advocacy of distinct interest groups have promoted a proliferation of small agencies. Cursory review of recent cases suggests that critical economic development efforts and/or opportunities have been lost to the complexities and communication inefficiencies caused by the existing segmented bureaucracy. The successes of the Community Solution Teams have proven that, in fact, there is a strong need for integrating strategy and operations across all state agencies – OECDD, DLCD, OHCS, DEQ and ODOT.  More successful integration could be attained through revised organizational structure and or processes.

Several concepts that address integration, and could be pursued either separately or in combination, include:

    • Identification of similar service regions and organization divisions in each department with a process that provides a single face to the public on a regional level.
    • A “no wrong door” approach that formalizes regional service teams with shared work programs across departments,
    • Departments and teams with shared objectives and performance measures.
    • A development advisory board consisting of one board member from each of the participating departments to help set shared strategy, consolidation of community development planning and outreach functions including infrastructure programming and planning grants at OECDD.
    • Housing all of the above activities in a newly established Oregon Development Planning Authority (ODPA).  ODPA would act as a “holding company” for all the departments, with its primary responsibility being to integrate policy and allocate resources to optimize community development results.  While each of the departments would retain their commissions and distinct status, many of the functions may be shifted and or redefined, especially administrative support functions which would be consolidated and provide considerable savings from scale economies.

Collectively these organizational refinements could allow the state to capture the best of specialization and integration while reducing cost incurred from the current stand alone departments with overlapping missions and redundant services.  The ODPA could also provide savings by providing a clearer reporting relationship with the legislature and governor’s office.  This cluster approach to departments in an “authority” creates new high-level multidisciplinary professional teams.  This structure will also allow for greater continuity in management, an approach that truly supports a customer centric culture. This is the institutionalization at the administrative level of the co-ordination function that CST provided through the Governor’s Office on an experimental basis.

5.      Separate goal, rule making and oversight functions from technical assistance.

DLCD has recently moved to separate its rule making staff and compliance decision-making staff from its field staff.  This effort is to be commended and should be sustained and perhaps set a pattern for other state departments.  The state will always have competing roles, within each department as well as between departments. Facilitating and regulating development to assure economic, social and environmental well-being is the overall goal.  Each department or division realizes that their distinct goals are not mutually exclusive but the adversarial nature of the processes is best served by separating their functions.  We need to keep it clear that field staff is first and foremost there to support local government and help them in achieving their community development objectives.  Conversely, those looking out for the state interest should critically evaluate decisions that might have adverse consequences to the environment, adjacent communities, and economy from the state perspective. This type of tension, between local and state concerns, has proven fruitful in identifying optimal solutions and needs to be reflected in the design of job descriptions and in the organizational culture of each department participating in community development related services.

6.      Focus streamlining on specific products and channel energies back into processes that need to be redesigned.

The state has recently undertaken an effort to streamline services related to economic development.  This effort has already born fruit in terms of building awareness of existing issues and focusing attention on the type of progress that can be achieved.  A good example of this is the service reorientation program at DEQ.  Streamlining efforts should be fully funded because it is essential in targeting improvements and will be most effective if the following approaches are utilized:

·        Identify the most important development activities and products from the state’s perspective (high value added and high frequency types of land development),

·        Query proponents of these types of projects to explain what services they need from government and what their experience has been. Include them in “process design teams” to examine and streamline all the related processes that deliver this service.

Many times these efforts get a good start by identifying high frequency processes (used a lot) and or high volume processes (big users) from the government’s perspective, but too often miss the linkages to other related processes that are in fact more critical to the key customers. For example a large land development effort may be most impacted by the process for determining the service development charges and not the longer and more complicated entitlement or permitting processes.  Using the “process design team” based work as a venue for training could also build internal capacity for ongoing process improvement and co-production partnerships with the departments’ customers.

7.      Establish Council of Governments (COGs) as regional service providers.

Oregon is a diverse state with one of the most sophisticated state land use planning systems in the nation.  The capacity of the state and local government is coming under increasing pressure due to declining revenue, the complexity brought on by regional differences, and the episodic nature of demand for planning services.  In combination these forces point to the potential merit of regional service providers, organizations that can allow continuity over extended cycle times, contain high levels of expertise, and can provide services for lower costs due to economies of specialization. COGs have already proven effective in this role at the regional level, but relationships between the state and these organizations should be refined and improved.  COGs have the inherent benefit of a close working knowledge of the region and multifaceted and deep relationships with the customers. Serious consideration should be given for using COG’s as primary and preferred providers of technical assistance and the targeted recipients of grants from state government, thus enabling them to provide services to smaller agencies within their sphere of influence. COG’s have a natural leadership and service orientation, are better versed in the needs of the region, and have long standing relationships. Their role as a service channel should be expanded.

Part III – Case Studies

This section offers just a few examples of how well intentioned goals, staff and policies have had significant unintended consequences.  The examples provide a window to view both the current workings of the land and economic development system and how some of the improvement initiatives discussed in the prior section could improve the situation.  Many more such cases are needed to support a comprehensive assessment and to thoughtfully test out improvement concepts.

Newberg Dundee Bypass


This case is an example of a state sponsored highway project with federal funding and local support.  It involves major state road infrastructure project with duration of 20 years.  This type of situation occurs with high frequency.  Current status is that a local exception decision is pending and an appeal is likely.


The cities of Newberg and Dundee are situated along state highway 99W. The highway serves as the major state roadway connecting Portland and North Central Oregon to the Central Coast.  The downtowns literally grew up around and along the highway that served to bring in visitors and residents, and, was provided by and maintained by the state.  The state and the municipalities had a shared interest in preserving the through capacity of the road. Neither the residents nor the state wanted a situation where passing through the town was an extended experience.

In 1992 traffic generated by more coastal bound visitors and developments further west on 99W had increased the amount of daily traffic through Newberg to create an unsatisfactory level of service.  Newberg completed a Transportation System Plan as required by the state-planning program that identified a bypass as the solution with a preference for a southern alignment.  ODOT was asked to study the feasibility of a bypass but limited state funds postponed any substantive effort until 1997.

In 1997 ODOT initiated the Newberg Dundee Transportation Improvement Project (NDTIP) charged with arriving at a multi-modal transportation solution to the congestion problem.  The project was guided by a formal working group consisting of elected and appointed representatives from the federal, local and sate jurisdictions and agencies involved.  ODOT’s primary mission was to build the facility in keeping with the constraints that come with limited federal dollars and maintaining a reasonable level of service on its state facility, and to do so in a cost efficient manner while maintaining consistency with the state planning program.  Early studies by ODOT confirmed that a bypass was needed but the project was halted in 1998 because funds were not available for the NEPA level of analysis required as part of federal funding or for construction.

In 2001 the project started up again and a series of alignment alternatives were mapped.  The planning and public participation process provided a wide array of evaluation and ranking criteria. The final selection of the preferred alternative was made by the policy group and represented what they thought best met the full array of criteria.  Amongst the criteria, that included everything from historic building preservation to pedestrian amenity, was the likelihood of success in obtaining a reasons exception to state planning Goals 3, 4, 11, and 14.  These goal exceptions would need to be successfully argued at the county level first and then sustained on appeal to LUBA should any involved party, including but not limited to DLCD, choose to contest the fact that another alternative could not reasonably meet the need without requiring the exceptions in part or in whole.  The NEPA process for selection and development of a preferred alternative did not easily lend itself to the level of detailed design that might be needed to sustain the reasons argument. Specifically the exact road width configurations in the downtown and the feasibility of accommodating greater volumes of traffic through a variety of demand and systems management on 99W were essential in sustaining the argument for additional interchanges. The selection made after $5M of planning and over a decade of work could in all likelihood be subject to remand by LUBA because a reasons exception may not be fully justified.


The case presents many issues, all of which are inter related, that collectively result in a process for critical infrastructure improvements that is too complicated, expensive and uncertain, and, too common and impactfull to be ignored.  Providing infrastructure is one of the major roles that business look to government to fulfill.  When local and state government cannot effectively deliver infrastructure it deters private investment and negatively impacts existing business and lowers community quality of life.

The NEPA process will not go away any time soon nor will the states desire to secure federal funds. The interaction of the NEPA process with the Oregon “exceptions” process creates a double jeopardy.  A jurisdiction can do their best to find the least impactfull and most cost efficient solution to a transportation problem and it may in fact meet with resounding approval by all parties at the local level and pass the federal NEPA hurdles.  However a detailed analysis of a discarded and perhaps judged to be inferior alternative, in terms of cost or other characteristics, could be shown to be least impactfull in terms of protection of farmlands or forests or accommodation of urban uses outside an urban growth boundary, as maybe the case for NDTIP.  If an appellant was to succeed with the argument that a discarded alternative was less impactfull and reasonable, LUBA could sent the entire project back through the NEPA process again taking more time and money. With each return through the process the requirements change, costs go up, funding is more problematic and options are foreclosed as other planning and development decisions move forward. The orientation of the ODOT team is clearly on specific project delivery focused on design and timely completion and the DLCD team and many other stakeholders look at a project study as their first opportunity to identify a preferred transportation plan that might end up endorsing any one of several possible projects.  These somewhat incongruous mindsets underscore the absence of a planning level between project design and general plan elements and a true team approach for multidisciplinary and collaborative transportation programming, land planning and facility design.


The impacts to the economy of NDTIP may be estimated from several perspectives.  Improved access to the coast means greater revenue and profits and taxes from the recreational economy.  Improved access to the towns of Newberg and Dundee means fewer wasted hours of commuting by workers from Portland and a higher degree of attractiveness for Newberg and Dundee as commuter based communities with higher land values and more taxes.  The downtowns could easily become more successful in capturing local commercial and retail purchases with better access and a more pedestrian orientation. They have in place plans to do so but are hamstrung by the bypass delays as costs of congestion and pollution mount.  The direct cost of this type of perpetual planning has gotten to the point where ODOT routinely budgets almost as much in state funding for the planning and approval as they do for the actual engineering design.  The process does protect critical resource lands but it may be possible to achieve that goal without the unintended consequences of delay and increased expense and opportunity cost.

Intervention concepts:          

·        Prioritize state funding for infrastructure projects that are already included in a locally adopted TSP.

·        Fund local TSPs that are fiscally constrained and use standard templates.

·        Fund functional plans at the regional level that layout bypasses and all critical state infrastructure.

·        Direct OECDD to formalize regional development offices and lead regional infrastructure programming.

·        Exempt projects in state approved regional plans from exceptions process when NEPA process is used.

·        Prioritize state funding for regional plans and projects based on impact on economic development.

Barnhart Road Extension


This case is an example of a locally sponsored highway project that will require state funding.  It involves a request for a goal exception to build a major access to the state highway system needed to support the marketability of about 900 acres of currently serviced industrial land in the city of Pendleton.   This type of situation occurs with high frequency in the state.  Current status is that a local exception decision is pending and an appeal is likely.


Pendleton’s industrial acreage is contained almost entirely in two major areas: The airport industrial area and the Goad Road Industrial area.  Both areas are significantly impacted and hampered by inadequate access.  The likely uses for these areas rely heavily on semi-truck related traffic. The cities inability to provide improved access has come at the cost of several lost opportunities, including: distribution centers for companies such as Wal-Mart and Bi-Mart along with a transportation company, Mid Columbia Bus, and at least one wholesale distribution company, Coca Cola Distributors.


The access limitations for new freeway exchanges in combination with the exceptions process for access roads renders both sites extremely difficult to develop.  The city has tried for years to pursue improved access and has been unsuccessful after spending over $35,000 in planning efforts to gain an exception for the Barnhart Road extension.  The fundamental problem is the exceptions rule requires a finding that “ no other reasonable alternative” not requiring an exception may be found.  In essence protection of under 50 acres of farmland that would be impacted by the road extension is holding 900 acres of otherwise serviced industrial land practicably off the market.   The city inventory of industrial land is such that expansion in other areas is probably not easily secured nor would it be as easily serviced if the proposed extension were achieved.


The impact to the economy of this delay in the availability of fully serviced industrial land may be viewed from many perspectives. It has most definitely resulted in the loss of jobs, loss of property rents to the airport authority, loss of construction jobs, loss of increased property taxes resulting from increased economic activity by related businesses and loss of income tax from the foregone business.  Another loss is the time and money invested by local and state officials in pursuit of an exception that appears to be elusive.

Intervention concepts:

Revise the exceptions requirement to allow by right infrastructure on EFU land if it is for serving uses within the UGB

Make roadways of regional significance an allowable use on EFU land and not require an exception if access is limited

Fast track master plans of regions with TSP’s to designate industrial service roadways

METRO UGB expansion and Damascus addition.


This case is an example of a METRO sponsored amendment to its UGB as part of its normally scheduled periodic review.  It involves a long, demanding and expensive process for ascertaining the rate of growth in the region and establishing a justifiable 20-year supply of land to accommodate all uses. The absence of a near term land supply has jeopardized expansion of certain industrial clusters and anecdotal evidence suggest major enterprise are re direction g operations to more business friendly environments. This type of situation occurs with high frequency.  Current status is that a local approval has occurred and review by LCDC is pending with objections on file and appeal to LUBA almost certain.


METRO area has spent well over $1million in studying how much it should expand its urban growth boundaries.  State policy requires that it maintain a 20-year supply of residential and commercial industrial land and provide updates at least every 5 years.  The most recent study has resulted in designating significant portions of the METRO expansion occur in one sub region, Damascus.

The Damascus area is not particularly well served or easily served.  Additionally the area is at quite a distance form the jobs and housing needs being generated by the expansion of the “Silicon Forest” industrial cluster that has emerged in Washington County.  The region has chosen to focus on the Damascus area fundamentally to achieve compliance with the priority lands statute that requires all “exception” land be brought in prior to conversion of other EFU land.


The fundamental problem is that the land planning system does not provide a competitive supply of shovel ready short term industrial and commercial land and the long-term supply is not where the market wants to expand.  This condition has been shaped by an unhelpful reliance on the rationing of land as a way to drive efficient urban form and the priority lands statute as a means of determining optimal urban form.  Both of these regulatory concepts have their basis in what have proven to be a specious planning theory.

Compact urban form has been heralded as the most efficient use of land from the perspective of infrastructure utilization and environmental impact.  While anecdotal evidence does support these assertions in many cases the theory has several parameters that are under represented. In order to achieve these economies and minimize impacts transit utilization must occur or other forms of high occupancy travel must be utilized.  While high-density form does support that type of transportation it does not necessarily cause them to occur.  Investment and planning for alternative modes to the single occupant vehicle and pricing to discourage other forms must be used to shift the travel demands. In point of fact the densities being achieved are not adequate to support traditional high occupancy transit systems and may be too high to work with the single occupant vehicle serving roadways that are being planed and built.

Another misconception is that compact urban form is necessarily less expensive in terms of infrastructure and other services.  As an example infrastructure to serve the Damascus expansion will reportedly cost double the amount of less intensive development occurring on farmland in Washington County.  Finally the notion that such infrastructure costs and expansion gymnastics are offset by the value produced by an agricultural economy is also doubtful.  Even taking into account the present value of all future agricultural use against the value created form future industrial use leaves one to the probable conclusion that protection of EFU land at the cost of economic expansion of industrial clusters makes no sense. In point of fact the entire agricultural industrial output in Washington County is estimated at $250 million/yr while Intel on a small portion of the urbanized land is attributed with over $6 billion dollars/yr of industrial output.

Intervention concepts:      

·        Redraft rules to require 50-year expansion area

·        Eliminate the priority lands statute

·        Require land being converted to urban use to be assessed for all infrastructure and civic services at the marginal cost

·        Remove the farm use assessment option for land within the urban reserve or urban growth boundary

·        Require development rights be purchased from designated urban areas

·        Require all regions to adopt revenue sharing agreements to focus planning on vision and not on fiscal necessity

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